Artemis Monthly Distribution Fund
Q3 2025 update

Fund objective

To generate monthly income, combined with some capital growth over a five-year period. 

About the fund 

The Artemis Monthly Distribution Fund gives investors access to the income-generating potential of a blend of bonds and shares. It is actively managed.  

Dividend-paying company shares – These are shares in companies worldwide that return a portion of their profits to their shareholders through regular cash payments (‘dividends’).  

High-yield bonds – High-yield bonds are issued by companies that ratings agencies (such as S&P and Moody’s) deem to be at greater risk of defaulting on their debts. As their name suggests, they offer a higher ‘yield’ (rate of interest) to compensate for the higher level of risk.  

Investment-grade corporate bonds – These are issued by companies with higher credit ratings. These are businesses that ratings agencies consider to be at relatively low risk of defaulting on their debts.  

Government bonds – These are widely viewed as being among the safest bonds (governments in developed economies rarely default on their debts). The interest rate, or ‘yield’, available here is lower than it is on high-yield and investment-grade corporate bonds – but they can provide a useful counterweight to the fund’s holdings in more economically sensitive bonds and shares. 

Performance 

Past performance is not a guide to the future.

Source: Lipper Limited/Artemis to 30 September 2025 for class I distribution units, GBP. All figures show total returns with dividends and/or income reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the fund. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class. This class may have charges or a hedging approach different from those in the IA sector benchmark. 

Overview 

Stockmarkets posted strong returns in the third quarter¹, with artificial intelligence (AI) and the largest US technology companies drawing the majority of investor attention². Various investment commitments have accelerated to such an extent that OpenAI has now signed more than $1trn worth of AI-related deals in 2025 thus far³.  

It follows that technology was one of the best performing sectors over the quarter (the MSCI ACWI Technology index climbed 15% in sterling terms)⁴.  

Away from the limelight, however, it was Chinese shares that posted the strongest returns⁵. Like in the US, it was the technology sector that led – with the Hang Seng Technology index gaining 25%⁶. It appears to us that China is finally shaking the long-held tag of being ‘uninvestable’ and optimism around AI is beginning to feed into the shares of Chinese technology giants, too. 

There was a strong rally in gold, which gained 17% versus the dollar in the third quarter⁷ and in early October breached $4,000/oz for the first time⁸. Meanwhile, corporate bonds maintained their positive momentum through the three-month period⁹. 

Against this backdrop, the fund made 7.7%, compared with gains of 3.8% from its benchmark, the Investment Association (IA) Mixed Investment 20-60% Shares sector¹⁰.  

Contributors 

Miner Kinross Gold was our best performing share. The extraction of gold is a very energy-intensive process, so the lower oil price¹¹ helped Kinross and fellow gold producer Agnico Eagle. 

Our best-performing sector was financials, with Italy’s Banco BPM and Spain’s Banco de Sabadell among our share portfolio’s top 10 contributors. 

Turning to bonds, our top performers included: Dick’s Sporting Goods, which announced in May that it would acquire Foot Locker¹²; Arqiva, which provides broadcasting and transmission services, as well as smart networks for energy and water; and Norwegian oil & gas producer DNO. 

Detractors 

Freeport-McMoRan was the biggest single detractor on the shares side after a mudflow at its Grasberg copper mine led to a cut in production¹³. Our investment thesis here was based on Freeport’s exposure to gold and copper but the negative news around Grasberg led us to sell out of the shares in mid-September. 

Bonds that detracted from performance included healthcare logistics company Owens & Minor and employment marketplace ZipRecruiter. 

Activity and positioning 

On the shares side of the portfolio, we took profits in some of our defence names. We continue to like the long-term theme, but after a strong rally in the sector this year¹⁴, we have recycled the capital elsewhere. 

We have also shuffled our bank holdings, taking profits in UniCredit, Wells Fargo and Mitsubishi UFJ Financial Group and re-allocating the proceeds to regional banks in Japan and the US. These represent better value than their global peers and M&A (merger & acquisition) activity is likely to increase in both regions, in our view. 

In addition, we have added to what we call ‘core income’ equities, in particular in the healthcare sector. Being under exposed to these areas in recent years has been additive to performance¹⁵, as we felt many of these companies came into the higher interest rate environment with too much debt.  

Within high-yield bonds, we have been focusing on shorter-dated (less time until maturity) corporate bonds for some time and over recent months – following the strong post-April recovery – we have been trimming some of our positions to ensure we have dry powder to take advantage of any volatility. We continue to favour corporate bonds over government bonds as we believe the balance sheets of the latter are in ill health. 

Outlook 

As above, we believe the opportunity in fixed income lies in short-dated high-yield bonds. The high – and consistent – level of income we can generate here is an attractive proposition for a portfolio that pays investors on a monthly basis, in our view.  

Looking to the future, we believe our approach – of a small, nimble team building a focused and simple portfolio of bonds and shares in relatively under-owned areas that offer good value and income – to be well suited to a less predictable investment backdrop.  

This makes us think we are well placed to keep delivering attractive monthly income and total returns to our investors.